2Q loss widens at Ugg boots maker Deckers

Deckers loss widens in 2nd quarter on slumping sales of Ugg boots, Teva sandals; shares slide

Associated Press

GOLETA, Calif. (AP) -- Deckers Outdoor Corp. said Thursday its second-quarter net loss widened, hurt by lower sales of its Ugg sheepskin boots and Teva sandals.

The decline marks the sixth quarter in a row that Deckers has reported a loss or a drop in profit. The loss was narrower than analysts expected, but its earnings outlook for the current quarter and the end of the year fell short. Investors sent shares down in aftermarket trading on fears about waning demand for Deckers' signature Ugg sheepskin boot.

CEO Angel Martinez said the April-June quarter typically has the weakest Ugg boot sales, but it served to clear out spring Ugg products to make way for fall Uggs. Cooler weather hurt sales of Teva sandals, he added.

Uggs inventory levels were higher than expected at the end of June, but Martinez said that was mainly due to timing, not weak demand. Some fall deliveries were sped up to help its factories ramp up for peak production in the second half of the year.

"We are very comfortable with the quality of our current Ugg brand inventory," Martinez said.

The loss for the three months ended June 30 totaled $29.3 million, or 85 cents per share. That compares with a loss of $20.1 million, or 53 cents per share, in the same months last year. Analysts expected a loss of $1.06 per share, according to FactSet.

Revenue fell nearly 3 percent, to $170.1 million from $174.4 million last year. Analysts expected revenue of $178.2 million.

Ugg revenue fell 7 percent to $100.4 million. Sales in new stores and more online shopping weren't enough to offset lower sales to department stores and other retailers, both in the U.S. and internationally, and lower sales in established stores.

Teva revenue fell 8 percent to $31.2 million. Revenue from Sanuk, a line of casual shoes and sandals, rose nearly 8 percent to $30.1 million.

The company raised its outlook on higher online sales and the planned opening of 36 stores in 2013, up from a prior expectation of 30. It now expects earnings per share for the year to increase 8 percent, from prior guidance of a 5 percent increase. That implies net income of about $3.73 per share. Analysts expect $3.67 per share.

But the company's profit outlook for the third and fourth quarter still both fell short of analyst estimates.

Deckers also expects revenue to rise 8 percent, up from prior guidance of 7 percent. That implies revenue of $1.53 billion. Analysts expect $1.51 billion.

Shares slumped more than 6 percent in aftermarket trading after closing Thursday up $1, or 1.7 percent, to $58.87. The stock is near a 52-week high of $60.25 and has risen 46 percent in 2013.

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